jpmorgan asian investment trust plc investment manager
TRANSCRIPT
JPMorgan Asian Investment Trust plcInvestment Manager Presentation13th February 2020 | Annual General Meeting
Ayaz Ebrahim, Managing DirectorPortfolio Manager, Emerging Markets and Asia Pacific Equities
1
Investment objective and risk profile
Please refer to the Investor Disclosure Document, latest annual report, and Key Information Document (KID) for more information relating to the Company.
JPMorgan Asian Investment Trust plc
The value of investments and the income from them can go down and up, and you may not get back as much as you paid in. Past performance is not a guide to the future.
Exchange rate changes may cause the value of underlying overseas investments to go down as well as up.
Investments in emerging markets may involve a higher element of risk due to political and economic instability and underdeveloped markets and systems. Shares may also be traded less frequently than those on established markets. This means that there may be difficulty in both buying and selling shares and individual share prices may be subject to short-term price fluctuations.
This fund may use derivatives for investment purposes or for efficient portfolio management.
External factors may cause an entire asset class to decline in value. Prices and values of all shares or all bonds could decline at the same time.
This trust may utilise gearing (borrowing) which will exaggerate market movements both up and down.
This trust may also invest in smaller companies which may increase its risk profile.
Investment objectiveAims to provide capital growth from a diversified portfolio of around 50 to 80 companies quoted on the Asian stock markets, excluding Japan. The Company pays quarterly dividends equivalent to 1% of its net asset value, set on the last business day of each financial quarter. The Company also has the ability to use gearing up to a maximum level of 20% of net assets to increase potential returns to shareholders.
2
Performance (GBP)
Inception date: 12th September 1997* Prior to 1st January 2001, MSCI AC Asia ex Japan (GDR).**Arithmetic excess return presented. Figures may not add up due to rounding.Source: J.P. Morgan Asset Management. Net asset value performance data has been calculated on a NAV to NAV (using the cum income NAV with debt at fair) basis, including ongoing charges andany applicable fees, with any income reinvested, in GBP. Please refer to the offering document(s) for details, including the risk factors before investing. Indices do not include fees or operatingexpenses and are not available for actual investment.Past performance is not an indication of current and future performance.
JPMorgan Asian Investment Trust as of 30th September 2019
2010 2011 2012 2013 2014 2015 2016 2017 2018JPMorgan Asian Investment Trust (NAV) 28.88 -23.50 13.55 2.89 11.27 -2.03 26.37 35.97 -5.27
MSCI AC Asia ex Japan (NDR)* 23.38 -16.69 16.99 1.16 11.32 -3.91 25.77 29.45 -9.05
NAV Excess Return** 5.50 -6.81 -3.43 1.74 -0.05 1.87 0.60 6.52 3.79
Annualised performance (%)
Calendar year performance (%)
Market valueJPMorgan Asian Investment Trust GBP 377.3m
Three months
Six months YTD
One year
Three years
Five years
Since launch
JPMorgan Asian Investment Trust (NAV) 0.45 2.69 13.16 7.94 12.04 14.04 7.84
MSCI AC Asia ex Japan (NDR)* -1.37 0.32 9.26 2.18 8.21 10.11 6.60
NAV Excess Return** 1.82 2.37 3.91 5.76 3.83 3.94 1.24
3
Performance attribution
Source: J.P. Morgan Asset Management, MSCI, FactSet, gross of fees in GBP. Data for Total Attribution shown (stock selection plus country/sector allocation). Attribution may not match official returnsdue to differences in systems, rounding. The portfolio is actively managed. Holdings, sector weights, allocations and leverage, as applicable are subject to change at the discretion of the InvestmentManager without notice. Past performance is not an indication of current and future performance.
JPMorgan Asian Investment Trust 12 Months ending 30th September 2019
2.56
1.49
1.32
0.93
0.57
0.34
0.24
0.22
-0.07
-0.20
-0.24
-0.70
0.10
-1.0 0.0 1.0 2.0 3.0 4.0
Financials (o)
Health Care (o)
Communication Services (u)
Consumer Discretionary (o)
Information Technology (u)
Real Estate (o)
Materials (u)
Industrials (u)
Managed Funds (o)
Utilities (u)
Energy (u)
Consumer Staples (u)
Cash
Asset allocation Stock selection
Country attribution (%)
Attribution summary Stock: 5.35Sector: 1.22
Benchmark MSCI AC Asia ex Japan
Sector attribution (%)
Attribution summary Stock: 6.19Country: 0.38
Benchmark MSCI AC Asia ex Japan
3.22
1.14
0.91
0.78
0.21
0.16
0.13
0.08
0.02
-0.02
-0.07
-0.11
0.10
-1.0 0.0 1.0 2.0 3.0 4.0
China (o)
Taiwan (u)
Indonesia (o)
Korea (o)
Malaysia (u)
Thailand (u)
Hong Kong (o)
Philippines (u)
Pakistan (u)
Singapore (u)
Vietnam (o)
India (u)
Cash
Asset Allocation Stock Selection
4
Top 10 contributors/detractors to active returns
Source: J.P. Morgan Asset Management, MSCI, FactSet, gross of fees in GBP.Attribution may not match official returns due to differences in systems, rounding. The portfolio is actively managed. Holdings, sector weights, allocations and leverage, as applicable are subject tochange at the discretion of the Investment Manager without notice. The companies above are shown for illustrative purposes only. Their inclusion should not be interpreted as a recommendation to buyor sell. Past performance is not an indication of current and future performance
Top 10 contributors Country Sector Weight difference%
Stock return %
Impact%
HDFC Bank Limited India Financials 3.86 33.55 1.05Baidu, Inc. Sponsored ADR China Communication Services -0.94 -52.45 0.77Jiangsu Hengrui Medicine Co., Ltd. China Health Care 1.14 55.32 0.55Ping An Insurance (Group) Company of China, Ltd. China Financials 2.28 21.91 0.44Taiwan Semiconductor Manufacturing Co., Ltd. Taiwan Information Technology 2.40 11.56 0.38PT Bank Central Asia Tbk Indonesia Financials 1.14 40.93 0.38PT Telekomunikasi Indonesia (Persero) Tbk. Indonesia Communication Services 1.31 35.82 0.36AIA Group Limited Hong Kong Financials 2.69 13.33 0.36HDFC Life Insurance Co. Ltd. India Financials 0.61 67.25 0.32PT Astra International Tbk Indonesia Consumer Discretionary 1.18 2.06 0.30
JPMorgan Asian Investment Trust 12 Months ending 30th September 2019
Top 10 detractors Country Sector Weight difference%
Stock return %
Impact%
E-Mart, Inc. Korea Consumer Staples 1.30 -48.75 -0.91IndusInd Bank Ltd. India Financials 1.83 -11.03 -0.29Lotte Chemical Corp. Korea Materials 0.55 -11.50 -0.29Housing Development Finance Corporation Limited India Financials -0.88 -10.57 -0.26Maruti Suzuki India Limited India Consumer Discretionary 1.47 0.59 -0.25Link Real Estate Investment Trust Hong Kong Real Estate -0.36 -6.85 -0.20Swire Pacific Limited Hong Kong Real Estate 1.39 -6.93 -0.18Infosys Limited India Information Technology -0.81 23.12 -0.16PetroChina Company Limited China Energy 0.56 -30.66 -0.16Samsung Fire & Marine Insurance Co., Ltd Korea Financials 0.98 -20.79 -0.16
Benchmark MSCI AC Asia ex Japan
5
Performance attribution
Source: J.P. Morgan Asset Management, MSCI, FactSet, gross of fees in GBP. Data for Total Attribution shown (stock selection plus country/sector allocation). Attribution may not match official returnsdue to differences in systems, rounding. The portfolio is actively managed. Holdings, sector weights, allocations and leverage, as applicable are subject to change at the discretion of the InvestmentManager without notice. Past performance is not an indication of current and future performance.
JPMorgan Asian Investment Trust Quarter ending 31st December 2019
0.41
0.31
0.29
0.21
0.06
0.05
-0.12
-0.20
-0.26
-0.31
-0.36
-0.69
-0.04
-1.0 -0.5 0.0 0.5 1.0
Information Technology (o)
Consumer Staples (u)
Utilities (u)
Health Care (o)
Industrials (u)
Real Estate (o)
Materials (u)
Consumer Discretionary (o)
Communication Services (u)
Managed Funds (o)
Energy (o)
Financials (o)
Cash
Asset allocation Stock selection
Country attribution (%)
Attribution summary Stock: -1.04Sector: 0.38
Benchmark MSCI AC Asia ex Japan
Sector attribution (%)
Attribution summary Stock: -0.53Country: -0.12
Benchmark MSCI AC Asia ex Japan
0.24
0.22
0.19
0.10
0.02
-0.00
-0.05
-0.15
-0.20
-0.29
-0.31
-0.40
-0.04
-1.0 -0.5 0.0 0.5 1.0
Thailand (u)
Taiwan (u)
Malaysia (u)
Philippines (u)
Singapore (u)
Pakistan (u)
Hong Kong (o)
Indonesia (o)
India (o)
Korea (o)
Vietnam (o)
China (o)
Cash
Asset Allocation Stock Selection
Investment Process
7
Investment philosophy
…fundamental, pragmatic, disciplined.
Our strategy combines bottom-up stock selection and top-down asset allocation to deliver a portfolio that aims to consistently add value over multiple market cycles.
We believe investing in core franchises that can deliver compounded growth over the long term, quality growth and restructuring or cyclical earnings recovery should produce superior returns over time.
Expert local knowledge supplemented by regional and global sector research produces a broad research platform, from which the portfolio managers can identify high conviction stock ideas that meet the above criteria.
We believe that buying attractively valued countries and currencies differentiates us from the average manager and our proprietary multi-factor based model provides discipline to the asset allocation process.
8
Sustainable Investing – Emerging Market & Asia Pacific Equities
Source: J.P. Morgan Asset Management. March 2019. ESG = Environmental, Social, Governance*per annum, relative to team’s coverage **Quintiles are based on total number of stocks, not market capitalization. The companies above are shown for illustrative purposes only. Their inclusion should not be interpreted as a recommendation to buy or sell. ROE = Return on Equity
We seek companies that run their businesses in a sustainable way, treating minority shareholders fairly and engaging in practices likely to enhance the company’s reputation, not compromise it
Research Approach
Engagement
Portfolio Construction
Strategic Classification is our assessment of a business’s potential for long-term value creation
98-question Risk Profile assesses multiple factors, including ESG, with a heavy tilt to Governance
A commitment to proxy voting, with elections proposed by our analysts and approved by PMs
>5,000 company meetings annually to enhance our understanding of issues and encourage best practices
Position sizing informed by Strategic Classification and Risk Profile
Target companies rated Premium or Quality
Representative Example – ESG in action
Excess return* by Risk Profile quintile (Jan-12 to Mar -19)
We aim to reinforce positive behaviour through engagement Samsung Electronics – Addressed capital allocation and
dividend policies, which have depressed ROEs Lukoil – Raised concerns about management of oil spills and
the need to replace aged pipelines.
Businesses with strong governance and few red flags tend to outperform over time
Businesses with numerous red flags tend to underperform significantly over time
Risk Profile
Few red flags Many red flags
Alpha by Quintile**2.1%
0.7%
-0.8%-1.9%
-0.2%-4.0%-2.0%0.0%2.0%4.0%
Q1 Q2 Q3 Q4 Q5
Current Portfolio
10
Sector and country positions
Source: J.P. Morgan Asset Management. The portfolio is actively managed. Holdings, sector weights, allocations and leverage, as applicable are subject to change at the discretion of the Investment Manager without notice.
JPMorgan Asian Investment Trust plc as of 31st December 2019
Relative to benchmark (%)
Relative to benchmark (%)
5.8 4.52.5
-1.2
2.6 1.8 0.8
-0.1 -0.5 -0.9 -1.9 -3.1 -3.4 -3.5
0.1
-5.0
0.0
5.0
10.0
Financials Insurance Banks DiversifiedFinancials
ConsumerDiscretionary
RealEstate
InformationTechnology
Energy HealthCare
CommunicationServices
Materials Utilities Industrials ConsumerStaples
Cash
Portfolio Weight (%) 28.8 10.6 16.8 1.4 17.8 7.7 19.2 3.9 2.6 10.7 2.4 0.0 3.3 1.7 0.1
Active and absolute sector positions
Portfolio Weight (%) 16.8 1.8 11.0 11.0 2.8 0.0 40.8 3.0 0.0 1.6 0.0 11.3 0.1
3.01.8 1.3 0.8 0.5
0.0 -0.1 -0.7 -1.1 -1.5 -2.1 -2.4
0.1
-4.0-2.00.02.04.0
KoreaSouth
Vietnam HongKong
India Indonesia Pakistan ChinaMain
Singapore Philippines Thailand Malaysia Taiwan Cash
Active and absolute country positions
Benchmark MSCI AC Asia ex Japan
11
Top 10 holdings Portfolio weight (%)
Alibaba Group Holding Ltd 7.8
Tencent 7.5
TSMC 7.2
Samsung Electronics 7.0
AIA 4.7
HDFC Bank 3.3
Ping An Insurance 3.3
China Construction Bank 3.1
China Resources Land 2.6
China Overseas Land 2.3
Portfolio positionsJPMorgan Asian Investment Trust plc as of 31st December 2019
Top 5 overweights Fundweight (%)
Relative position (%)
HDFC Bank 3.3 3.3
AIA 4.7 2.3
China Resources Land 2.6 2.3
Tencent 7.5 2.2
TSMC 7.2 2.0
Top 5 underweights Fundweight (%)
Relative position (%)
Reliance Industries 0.0 -1.1
ICBC 0.0 -1.0
Hon Hai Precision 0.0 -0.7
ICICI Bank 0.0 -0.7
Bank of China 0.0 -0.7
Benchmark MSCI AC Asia ex Japan
Source: J.P. Morgan Asset Management. The investment trust is actively managed. Holdings, sector weights, allocations and leverage, as applicable, are subject to change at the discretion of the Investment Manager without notice.
12
Market outlook
13
Key Issues for 2020
Source: J.P. Morgan Asset Management, MSCI, Standard & Poor’s. EM growth alpha: Consensus Economics . Opinions, estimates, forecasts, projections and statements of financial market trends are based on market conditions at the date of the publication, constitute our judgment and are subject to change without notice. There can be no guarantee they will be met. REER = Real effective exchange rate.Ranges: last 20 years, as of end December 2019
Issues 2017 2018 2019 2020
Late Cycle Mid Cycle Late Cycle Late Cycle Extended cycle
USD Cycle (USD REER Index) Falling Rising Rising in 1HFalling in 2H Moderating
Emerging Markets Growth Alpha Improving Stable Stable Improving
Earnings Strong Flat Weak Improving
Valuation: Price to Book Attractive Average Below average Average
Research signal: Expected Return High Low High Average
Macro risk, growth and valuation
14
Central bank actions turned supportive since beginning of 2019
-60
-50
-40
-30
-20
-10
0
10
20
30
40
'05 '08 '11 '14 '17
39 cumulative cuts over the past 6 months
Number of rate hikes / cuts
Rolling count of last 6 months (34 DM & EM countries)
Source: Bloomberg, National Central Banks, Markit, J.P. Morgan Asset Management. DM = Developed Markets, EM = Emerging Markets.Data as of 31 December 2019. Opinions, estimates, forecasts, projections and statements of financial market trends are based on market conditions at the date of the publication, constitute our judgment and are subject to change without notice. There can be no guarantee they will be met.
15
US Dollar strength remains a key driver for equity performance
Source: FactSet, MSCI, J.P. Morgan Asset Management. REER = Real Effective Exchange Rate* Based on MSCI total return index in U.S. dollar terms. Data reflect most recently available as of 31/12/19
Relative APxJ / DM equity performance and USD REER
Index, rebased 1995 = 100 Index, inverted scale
MSCI AC APxJ / MSCI The World (DM)* USD REER
The “US Dollar Smile”
US Recession& Risk-off
US growth outperformance
Global growth still positive, but US underperforms
Stronger USD
Source: J.P. Morgan Asset Management.For illustrative purposes only.
90
95
100
105
110
115
120
125
13020
40
60
80
100
120
'95 '97 '99 '01 '03 '05 '07 '09 '11 '13 '15 '17 '19
USD depreciation and Asian equity outperformance
USD appreciation and Asian equity underperformance
16
Are earnings revisions turning the corner?
Source: JPMorgan Asset Management. Opinions, estimates, forecasts, projections and statements of financial market trends are based on market conditions at the date of the publication, constitute our judgment and are subject to change without notice. There can be no guarantee they will be met. Data reflect most recently available as of 31st December 2019. Forecasts are not a reliable indicator of future performance.
Earnings Revisions: MSCI Asia Pacific ex Japan (USD)
0.20
0.40
0.60
0.80
1.00
1.20
1.40
Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Dec-17 Dec-18 Dec-19
Up
Dow
n R
atio
(x)
MSCI AC APxJ revision (U-D)/(U+D)
17
Valuations in-line with long term average
Source: MSCI, J.P. Morgan Asset Management. Indices do not include fees or operating expenses and are not available for actual investment. Opinions, estimates, forecasts, projections and statements of financial market trends are based on market conditions at the date of the publication, constitute our judgment and are subject to change without notice. There can be no guarantee they will be met. Data reflect most recently available as of 31st December 2019
MSCI Asia ex Japan Trailing PB
1.6
1.0
1.2
1.4
1.6
1.8
2.0
2.2
2.4
2.6
2.8
3.0
04 06 08 10 12 14 16 18
-1sd 1.4
+1sd 2.1
x
Avg 1.8
18
Where do we see the most attractive expected returns?Five year expected return (ER): Forecast earnings, dividends, change in valuation and currency
Sector ER vs. MSCI AC Asia ex Japan Average (%) Country ER vs. MSCI AC Asia ex Japan Average (%)
10.0
10.1
10.2
10.7
11.0
11.9
12.5
13.5
13.8
14.8
8 10 12 14 16 18
Thailand
Philippines
Taiwan
Malaysia
Singapore
India
Hong Kong
Indonesia
China
Korea
9.2
10.0
10.8
11.2
11.5
11.5
12.1
12.5
12.7
13.0
15.9
8 10 12 14 16 18
Health Care
Consumer Staples
Utilities
Industrials
Communication Services
Materials
Real Estate
Information Technology
Consumer Discretionary
Energy
Financials
Source: MSCI, J.P. Morgan Asset Management. Index coverage for Five Year Expected Return may not be 100%Indices do not include fees or operating expenses and are not available for actual investment. Opinions, estimates, forecasts, projections and statements of financial market trends are based on market conditions at the date of the publication, constitute our judgment and are subject to change without notice. There can be no guarantee they will be met. Data reflect most recently available as of 31st December 2019Forecasts are not a reliable indicator of future performance.
19
Volatility is inherent in Asian Equities
MSCI AC Asia ex Japan intra-year declines vs. calendar year returns
Despite average intra-year drops of -22% (median: -17%), annual returns are positive in 21 of 32 years
26% 28%
-10%
27%18%
99%
-18%
2%8%
-42%
-10%
62%
-36%
-6% -10%
43%
14%19%
30%37%
-54%
68%
17%
-19%
19%
1% 2%
-11%
3%
39%
-16%
15%
-11%-20%
-29%
-11%-12%-5%
-26%
-14%-11%
-46%-46%
-15%
-40%-38%-30%
-15%-21%
-9%-20%-18%
-63%
-20%-16%
-30%
-16%-15%-10%
-27%
-13%-5%
-26%
-14%
-80%
-60%
-40%
-20%
%
20%
40%
60%
80%
100%
'88 '89 '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19
Source: FactSet, MSCI, J.P. Morgan Asset Management.Returns are price returns based on MSCI AC Asia ex Japan Index in U.S. dollar terms. Intra-year decline is the largest peak to trough decline during the respective year. Data reflect most recently available as of 31/12/19.
Calendar year returnIntra-year decline
20
Important information
This is a marketing communication and as such the views contained herein do not form part of an offer, nor are they to be taken as advice or a recommendation, to buy or sell any investment or interest thereto. Reliance upon information in this material is at the sole discretion of the reader. Any research in this document has been obtained and may have been acted upon by J.P. Morgan Asset Management for its own purpose. The results of such research are being made available as additional information and do not necessarily reflect the views of J.P. Morgan Asset Management. Any forecasts, figures, opinions, statements of financial market trends or investment techniques and strategies expressed are unless otherwise stated, J.P. Morgan Asset Management’s own at the date of this document. They are considered to be reliable at the time of writing, may not necessarily be all inclusive and are not guaranteed as to accuracy. They may be subject to change without reference or notification to you. It should be noted that the value of investments and the income from them may fluctuate in accordance with market conditions and taxation agreements and investors may not get back the full amount invested. Changes in exchange rates may have an adverse effect on the value, price or income of the products or underlying overseas investments. Past performance and yield are not reliable indicators of current and future results. There is no guarantee that any forecast made will come to pass. Furthermore, whilst it is the intention to achieve the investment objective of the investment products, there can be no assurance that those objectives will be met. J.P. Morgan Asset Management is the brand name for the asset management business of JPMorgan Chase & Co. and its affiliates worldwide. To the extent permitted by applicable law, we may record telephone calls and monitor electronic communications to comply with our legal and regulatory obligations and internal policies. Personal data will be collected, stored and processed by J.P. Morgan Asset Management in accordance with our EMEA Privacy Policy www.jpmorgan.com/emea-privacy-policy.
Investment is subject to documentation. The Investor Disclosure Document, Key Features and Terms and Conditions and Key Information Document can be obtained free of charge from JPMorgan Funds Limited or www.jpmam.co.uk/investmenttrust. This communication is issued by JPMorgan Asset Management (UK) Limited, which is authorised and regulated in the UK by the Financial Conduct Authority. Registered in England No: 01161446. Registered address: 25 Bank Street, Canary Wharf, London E14 5JP.
Material ID: 0903c02a824ca018